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“This Is a Slow Roll”: Silicon Valley Insiders Think That Facebook Will Never Be the Same After the Cambridge Analytica Scandal

The scandal, the latest in Facebook’s tortured history with privacy concerns, has eroded the potential for any of the company’s leaders to ever credibly run for public office. And it’s made Zuckerberg’s Chinese dreams a lot more fraught. One tech investor put it more succinctly: “They’re fucked.”

Mark Zuckerberg at Cortex Innovation Community technology hub in St. Louis.

From A.P. Images/REX/Shutterstock.

Late last Friday, Paul Grewal, Facebook’s vice president and deputy general counsel, wrote a seemingly straightforward blog post on the company’s newsroom page indicating that Facebook was suspending the data firm Strategic Communications Laboratory, and its political unit, Cambridge Analytica, for policy violations—in particular, for obtaining user information without corporate approval. It was an egregious breach, but it appeared as though Facebook was handling it responsibly. Rather than fumbling around for an articulate response, as the company had in the wake of revelations that its platform facilitated the dissemination of fake news that influenced Donald Trump’s election, Facebook was trying to get ahead of the bad press, to get “out front,” as they say in the lingua franca of corporate communications. “We are committed to vigorously enforcing our policies to protect people’s information,” Grewal wrote. “We will take whatever steps are required to see that this happens. We will take legal action if necessary to hold them responsible and accountable for any unlawful behavior.”

As we all now know, of course, Facebook wasn’t offering a bare-chested confessional. Instead, a day later, The New York Times, in partnership with The Guardian, published a blockbuster exposé that accused Cambridge Analytica of exploiting the Facebook data of some 50 million people. Grewal’s note, it appeared, was simply a dastardly attempt to forestall yet another calamitous story about Facebook surrounding the election. “This attempt to appear ‘out front’ is totally disingenuous,” the Times’s Gabriel J.X. Dance,who worked on the initial story, wrote on Twitter.

To some cynical journalists or techno-skeptics, this maneuvering might seem like Facebook just being Facebook—that the Cambridge scandal is merely the latest in a litany of privacy intrusions; that Facebook’s de facto response is, as Dance noted, disingenuous. But this scandal really is different, and everyone in Silicon Valley knows it. Since the story broke a significant investor and entrepreneur, who has worked in tech for over two decades, recalled to me that the incident reminded him of what happened to Microsoft in the 1990s, when years of pugilistic corporate behavior caught up to the company in the form of significant antitrust regulation. One tech investor put it more succinctly: “This is a slow roll into serious fuckery. They’re fucked.”

Indeed, the repercussions are massive in both immediate and longitudinal ways. Just a couple of days into the Cambridge crisis, Facebook’s stock has dropped by more than 20 points, which has led its market capitalization to fall by tens of billions of dollars. Senators Mark Warner and Amy Klobuchar have called for Mark Zuckerberg to testify before Congress. A British M.P. sent Zuckerberg a letter asking him to testify before Parliament. The Federal Trade Commission is exploring whether Facebook violated the terms of a 2011 consent decree around privacy. A shareholder has filed a class-action lawsuit. Facebook’s chief security officer, Alex Stamos, is reportedly leaving the company after battling with executives about the company’s response to Russian’s involvement in the 2016 election. A #DeleteFacebook campaign has surfaced across social media.

On a more prosaic level, as one entrepreneur who has personally spent time with Zuckerberg and Sheryl Sandberg put it to me, this scandal has likely eliminated the potential for any of the company’s leaders to ever credibly run for public office. Another person who has worked with Zuckerberg in the past pointed out that the C.E.O.’s hopes of getting his company into China are now less likely. Why would a country that controls the Internet let Facebook, which clearly allows its partners to manipulate people’s minds with their data, let Facebook operate there?

Scandals surrounding privacy issues are part of Facebook’s DNA. Back in his Harvard days, Zuckerberg told a friend that he could use The Facebook (as it was called back then) to find out anything on anyone. “I have over 4,000 emails, pictures, addresses, SNS,” Zuckerberg proudly wrote to his friend. “People just submitted it. I don’t know why. They ‘trust me.’ Dumb fucks.” Zuckerberg was still a teenager when he wrote that note, but that glaring blind spot has become a leitmotif of his tenure as an executive. In 2010, I wrote a piece for The New York Times pointing out that Facebook’s privacy policy was so confusing that you had to navigate through 50 different settings with more than 170 options to make your information private. Back then, the company’s privacy statement was longer than the U.S. Constitution.

In general, though, Facebook has survived it all on account of its staggering addictiveness, and because Wall Street was making so much money from all the stuff advertisers could do with that data. The closest that the company came to any actual legal trouble occurred when Facebook settled a privacy suit with the Federal Trade Commission after data that seemed private was “repeatedly . . . shared and made public.”

In some regard, however, Facebook’s ill-fated history of privacy concerns may pale in comparison to the impact of its proximity to the slimy executives at Cambridge Analytica, who bragged about what they could do with that data. In an undercover video posted by Channel 4 News, Mark Turnbull, the managing director of Cambridge’s Political Global, spoke about how the company uses all that data to twist the public to its will, to take data and turn it into propaganda, and of how much of that same data it is willing to get in order to win a campaign. “The two fundamental, human drivers, when it comes to taking information onboard effectively, are hopes and fears,” Turnbull said in the video, which was secretly recorded. “And many of those [hopes and fears] are unspoken, and even unconscious; you didn’t know that was a fear until you saw something that evoked that reaction from you.” They would not be able to tap into those hopes and fears if it wasn’t for the information they were able to glean from people using the data they get from Facebook. As Turnbull pointed out, “our job is to drop the bucket further down the well than anybody else, to understand what are those really deep-seated underlying fears, concerns. It’s no good fighting an election campaign on the facts, because actually it’s all about emotion.”

In the short term, the one saving grace for Zuckerberg is that the people who took advantage of the data manipulation and ad targeting to win office—namely Donald Trump, and various Republicans who support him, either by choice or political necessity—may not want to regulate a company that could, if left to its own devices, be used again in 2020 to retain the White House. Brad Parscale, the digital expert who had worked previously for Trump’s campaign, has bragged repeatedly since November about how his ability to micro-target people using Facebook, and a partnership with Cambridge Analytica, that got Trump elected in the first place. Given that Parscale is now running Trump’s 2020 re-election bid, he will presumably endeavor to ensure that the president of the United States doesn’t block his capacity to manipulate people on Facebook by tapping into the electorate’s hopes and fears.

Something tells me that if the Trump campaign can’t take advantage of Facebook’s data powers in 2020, the Republican strategy could be in major trouble. Now that Cambridge has suspended its reprobate chief, Alexander Nix, it seems unlikely that Trump’s allies, including Jared Kushner and Robert Mercer, will be able to take advantage of the data they allegedly stockpiled during the last election. As for the social networks, the continually falling stock prices of Facebook and Twitter is indicative of how Wall Street thinks this is all going to go down. In short: not well.

Whether Facebook is inevitably broken up is nothing more than a guessing-game right now. As one investor recently told me, even if it is dismantled—and Facebook, Instagram, WhatsApp, and Oculus are split into separate companies—it won’t really change all that much from a consumer standpoint. It would, however, change a lot from a data standpoint. The more you use Facebook’s products, the more Facebook’s products get to use you, collectively knowing more about you than you know about yourself. Creating big, beautiful walls between that data could really hurt Facebook’s ability to micro-target its ads the way it does so incredibly well today. What is clear to everyone, whether you’re Facebook, Cambridge, Parscale and Trump, or just an average user who likes to post pictures of your kids on the social network, is that the data the company collects is unfairly being used to manipulate the 2.25 billion people who use the platform—to sway opinion, incite outrage, create division—and Facebook can’t just pretend to get out in front of its problem any longer. Something has to change.